EU recovery on a more solid footing – risks still loom

The slight improvement in GDP growth in Q4-2014 combined with the recent uptrend in economic indicators bode well for a more broad-based gain in economic momentum in the EU. The weaker Euro and low oil price will provide a major boost to domestic demand and exports.

Private consumption looks set to take the lead as the key driver of economic growth in 2015. Low energy prices, low inflation, falling unemployment and rising wages facilitate spending decisions. Robust growth is forecast for Spain, the UK and Germany.

Investment growth is expected to strengthen from 2016. EUROFER Director General Axel Eggert: “The current slump in investment in the EU needs to be reversed or else industry is at risk of losing its competitive edge. So far, weak confidence, difficult access to finance and uncertainty about the impact of EU energy and climate change policies on running a business in the EU have kept companies standing at the side-lines. The ECB’s accommodative monetary policies in combination with national and EU initiatives to stimulate investment could help the private sector becoming less risk-aversive”.

Total activity in the steel using sectors over the whole year 2014 grew 2.2%. This was primarily the result of a base year effect fuelling growth in the first quarter of 2014

Prospects for this year and next are moderately positive with fairly similar growth of activity expected for 2015 and somewhat stronger growth pencilled in for 2016.

Activity growth in 2016 is foreseen to become more investment-driven as the investment climate in the EU will get support from easing financing conditions and EU policy measures. Exports will continue to boost output as well.

Destocking curtailed EU steel demand in Q4-2014. The 3.9% rise of apparent steel consumption in 2014 was largely absorbed by imports from third countries. The EU steel market is expected to strengthen mildly further in 2015-2016. However, the key uncertainty for EU steel producers is whether third country imports will prevent them again from benefiting from the mildly positive trend in EU steel demand.

EUROFER Director General Axel Eggert: “The first customs data for steel trade in early 2015 fuel concerns that imports will remain at an elevated level as long as excess production - mainly originating in China - is being pushed into the international markets at cut-rate prices, thereby distorting traditional steel trade flows. As such, China’s supply glut is hurting the profitability and viability of the global steel sector.”

Steel is 100 % recyclable, over and over again, without loss of its unique properties – a permanent material for today´s and future generations. STEEL MADE IN EUROPE is essential. The EU steel industry plays a vital role in many of Europe´s strategic supply chains. It offers value added products and services developed in close cooperation with its customers to create a stronger, lighter and more sustainable world. EUROFER, the European Steel Association, represents almost 100 percent of steel made in Europe, combining a turnover of approximately €166 billion – a share of 1.3 percent in the EU’s GDP. At more than 500 steel production and processing sites in 24 EU member states we provide direct employment for 335 thousand people and indirect employment for millions of European citizens.